Sandisk, Seagate, and Western Digital Support Robust AI-Driven Storage Demand

TLDR

• Sandisk exceeded third-quarter expectations with $5.95 billion in revenue, a 97% year-over-year increase, though shares declined over 6% in after-hours trading.
• Revenue from Sandisk’s Datacenter division more than tripled, reaching $1.47 billion for the quarter.
• Over the last 12 months, Seagate and Western Digital shares have climbed approximately 600% and 850%, respectively.
• Bank of America characterizes the HDD industry as an “oligopoly,” granting Seagate and Western Digital significant pricing leverage.
• The surge in AI-related data storage demand continues to outstrip supply, enabling manufacturers to increase prices.

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(SeaPRwire) –   Despite a robust third quarter, Sandisk failed to impress Wall Street enough to sustain its stock price. Revenue reached $5.95 billion, significantly surpassing the $4.70 billion anticipated by analysts and marking a 97% increase from the previous year. Adjusted earnings per share reached $23.41, well above the projected $14.54.

Sandisk Corporation, SNDK

The stock, which had already rallied roughly 350% throughout the year, fell more than 6% during Thursday’s extended trading session.

The company’s fourth-quarter revenue guidance of $7.75 billion to $8.25 billion comfortably beat the $6.49 billion consensus estimate. Similarly, the adjusted profit forecast of $30 to $33 per share significantly exceeded the $22.70 expectation.

Regarding the stock’s decline, Cerity Partners analyst Michael Ashley Schulman noted that the guidance lacked the “wow factor” required to maintain the current momentum. Western Digital, which also reported earnings that topped estimates, saw its shares dip nearly 8% during the same period.

CEO David Goeckeler described the quarter as a pivotal moment, stating, “This quarter marks a fundamental inflection point for Sandisk — where our technology leadership is enabling a deliberate shift in our mix toward the highest-value end markets, led by Datacenter.”

The Datacenter unit was a standout performer, with revenue tripling to $1.47 billion in Q3. Because AI workloads demand massive amounts of flash storage and demand currently exceeds supply, Sandisk has the flexibility to implement price hikes.

AI Fueling a Storage Arms Race

The broader storage industry has emerged as a primary beneficiary of the AI infrastructure expansion. Data centers require high-capacity drives to manage, train, and store extensive AI datasets. While GPUs handle processing, hard disk drives and flash storage manage the data—a demand that shows no signs of cooling.

Seagate reported fiscal 2025 annual revenue of $9.10 billion, a 39% year-over-year increase. Its most recent quarterly revenue reached $3.11 billion, up 44% and beating the $2.95 billion forecast, while adjusted EPS of $4.10 surpassed the $3.50 consensus.

Western Digital reported fiscal 2025 revenue of $9.52 billion, a 51% increase over the previous year. Its second-quarter revenue of $3.02 billion outperformed the $2.98 billion Wall Street estimate, with adjusted EPS of $2.13 exceeding the $1.95 projection.

Bank of America analyst Wamsi Mohan described the HDD sector as an “oligopoly” with few competitors and minimal risk of new market entrants. This market structure provides Seagate and Western Digital with pricing power as major tech firms compete for storage capacity.

Long-Term Contracts and New Technology

Mohan also highlighted a transition toward long-term supply agreements, which provide more predictable and recurring revenue. Both Seagate and Western Digital are increasingly securing customer commitments rather than relying solely on spot market hardware sales.

Heat-assisted magnetic recording (HAMR) technology serves as another catalyst, allowing firms to increase data density on existing drives, which lowers material costs while expanding capacity.

Mohan’s bullish outlook suggests Seagate’s earnings could nearly double to $45 per share by 2028, with a price target of $700. For Western Digital, he projects potential earnings of $33 per share and a price target of $495.

Prior to Thursday’s after-hours decline, Sandisk’s stock had gained approximately 350% in 2025.